National 6 (Spotlight Weekly)

Mixed Reaction

The budget for the fiscal year 2002/03 has received both bouquets and brickbats

By SANJAYA DHAKAL

A week after he unveiled the budget for the fiscal year 2002/03, Prime Minister Sher Bahadur Deuba is receiving both positive and negative comments from the private sector.

While the opposition Unified Marxist-Leninist has, not surprisingly, criticized every aspect of the budget, the private sector has come up with more balanced viewpoints.

"All in all, the budget is balanced and has both positive and negative aspects," said Rajendra Kumar Khetan, a prominent industrialist and acting president of the Federation of Nepalese Chamber of Commerce and Industry (FNCCI).

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Outlining the FNCCI's reaction, Khetan said the budget has three positive thrusts. "First, it is small, comprehensive and without shocks or surprises. Second, it has not, thankfully, hiked direct taxes and revenue. Third, it gives continuity to the policy of liberalization, financial sector reform and creation of investment-friendly environment."

However, the federation has expressed reservations over the budget's silence on measures to make the country's legal and other provisions compatible to the World Trade Organization (WTO). Nepal has been campaigning to get membership of the WTO.

"While there is increase in refinancing of sick industries from Rs 1 billion to Rs 1.5 billion, the decision has to be taken at the highest level regarding the lowering of bank interest and rescheduling of loan to them," said Khetan. He also said the federation was not happy about the budgetary provision that brought exports under the net of the Income Tax Act.

In its press release, the Hotel Association Nepal has termed the budget as largely positive. But it has described the efforts outlined in the budget for reviving the tourism sector as inadequate. The association has called for simplifying visa procedures and improving the internal security situation, among other things.

The Nepal Chamber of Commerce (NCC), too, came out with a mixed reaction. It welcomed the attention paid by the budget to restoring peace but expressed concerns over the cuts in the development expenditures, saying that would worsen the overall development activities. It has termed the estimated revenue collection of Rs 57.15 billion as "ambitious".

The NCC has welcomed the new provision whereby small traders will have to pay 0.1 percent of the total transaction or Rs 1,000 per year in case of not maintaining proper transaction records or failing to submit transaction records. It has also welcomed the move to increase the income tax exemption limit.

The Export Council of Nepal has castigated the government for failing to introduce any measure to inject a fresh lease of life into the ailing export sector. The press release by the council charges the government of completely ignoring their suggestions "even in these pressing times". It has criticized the new budget's move to continue the 0.75 percent income tax on export earnings.

The council, however, praised the government for its decision to award top five exporters and top five foreign-based importers.

Donors, on the other hand, seem to be in a wait-and-watch mood. According to a highly placed official, most of the donors are planning to support the government that will take over after the November election. Except for Japan and Asian Development Bank (ADB), who have hinted some budgetary support, donors have indicated they would come out with support once the elected government takes charge, the official said.

From all these positive and negative comments, there was one word that stood out very loud and clear - implementation. A budget is as good as its implementation, everybody seemed to tell the government. And there lies the greatest problem.